Bank of England policymaker Catherine Mann says financial markets are pricing in “too many rate cuts”, speaking in an interview with Bloomberg TV.

The comments by the Monetary Policy Committee member come as traders bet that the UK central bank could begin cutting interest rates before the US and the eurozone.

Money markets have a 20% expectation that the BoE will announce its first interest rate cut since the pandemic as early as May – and a total of three 25 basis point reductions by the end of the year.

While the chances of the same move by the US Federal Reserve and the European Central Bank hover around 10%.

But Mann says: “I think they [the markets] are pricing in too many cuts, that would be my personal view. In some sense I don’t have to cut because the market already is.”

Last week, the MPC external member voted in an 8-to-1 split to keep interest rates unchanged at 5.25% for the fifth meeting in a row, a 16-year high. The central bank is battling inflation, which fell 0.6% to 3.4% last week, but is still above its 2% target.

The dissenting policymaker was another external member, Swati Dhingra, who repeated her call from the previous meeting to lower the rate to 5%.  

Mann adds: “We can hold bank rate for quite some time, and the financial markets are already easing on expectations of future BoE cuts.

“I think that markets are a bit too complacent about how long they think the MPC will hold rates.”

Mann also poured cold water on the idea that the BoE is in a better position to cut rates before the US and Europe.

She says: “When we look at the data, comparing the deceleration in inflation and underlying wages for the US, the UK and the euro area… one of the things that comes out of that comparison is that wage dynamics in the UK are stronger and more persistent than the wage dynamics in either the United States or the euro area.

“So on that basis, it’s hard to argue that the Bank of England would be ahead of the other two regions, particularly the US.”

However, markets prefer to remain buoyed by BoE governor Andrew Bailey, who last week said that rate cuts are “on the way” hours after its rate-setting body held the base rate.

Bailey said it was “reasonable that markets are taking the view” that there will be two to three rate cuts this year “given how inflation has performed, said the central bank head at a press conference yesterday.